Farah Khan –
The idiom, “Marry in haste, repent at leisure,” is true of the property sector.
Many buyers feel that they were too quick to grab deals to understand the deal properly but soon find out that they could have waited, sought professional advice – both from property and legal experts. Those signing documents without proper scrutiny and advice are finding themselves in serious trouble.
The average buyer fails to realise that the Agreement given to them by the real estate agent during negotiations is legally binding.
Such an Agreement can include important information such as (1) Whether the property is freehold, leasehold, cross lease or a stratum estate (2) A list of the chattels being sold with the property (3) The rate of interest that the parties must pay if settlement if either party defaults on settlement (4) Any other conditions such as builders report, finance, valuations or LIM reports and (5) The settlement date.
It is important for buyers to realise that not all sale and purchase agreements are standard contracts.
In many cases the ‘standard form’ approved by the Auckland District Law Society (ADLS) has options and clauses that an unsuspecting buyer may not realise have been ticked or removed.
I have seen contracts in which the standard provision to check the legal title of the property has been crossed out of the fine print without the buyer realising that the contract has become unconditional.
Some distressed buyers visiting our office tell me that they have had a ‘Gentleman’s Agreement’ with their vendor on several issues.
Invariably, when contacted, the vendor would deny saying that they had given no assurances and that they would abide by the written agreement.
There are two main reasons for buyers ignoring lawyers at the time of signing an agreement. First, the cost; they erroneously think that lawyers’ fee can be avoided but soon find out they were wrong. Second, the property market is so hot that people are pressurised into taking quick decisions.
It is also the responsibility of vendors to understand the importance of transparency and the warranties provided to the buyer under the standard ADLS Agreement. If the Vendor cannot provide certain warranties, these must be omitted from the Agreement or expressly stipulated.
It is not enough if the vendor or the buyer state that they had no idea what was going on and that they believed that the agent had sorted out everything. It is not the agent’s job but that of a lawyer to make sure that you understand what you are doing.
There is a Latin phrase that applies to the property market – ‘Caveat Emptor,’ meaning, ‘Buyer Beware’
Farah Khan is Partner & Notary Public Practice Manager at Khan & Associates Lawyers and Notary Public based in Papatoetoe, Auckland. She can be contacted on (09) 2789361. Facebook: Farahkhanlawyer.